Find ways to fund stalled road projects: Gadkari to bankers

Source: The Hitavada Date: 30 Jun 2018 09:40:07

MUMBAI,

(PTI),

AS MORE than 56 large road projects are stalled for want of financial closure, Union transport Minister Nitin Gadkari on Friday asked bankers to find ways to finance these hybrid annuity model (HAM) projects worth thousands of crores. The National Highway Authority of India (NHAI) has awarded 104 HAM projects including some during the previous Government’s term, but as many as 56 of them are stuck as developers are unable to secure financial closure, Gadkari said after a closed-door meeting with bankers, LIC, an RBI Deputy Governor and NHAI brass here. Bankers who attended the meeting include SBI Chairman Rajnish Kumar, LIC Chairman VK Sharma, Bank of Baroda Managing Director BS Jayakumar, Union Bank Managing Director Rajkiran Rai and private sector lenders Uday Kotak and Ramesh Sobti of IndusInd Bank.

“There are 104 HAM projects worth Rs 1.25-1.5 trillion. Of these, 56 are yet to secure financial closure. We want banks to finance them and at Friday’s meeting we’ve asked banks about their issues in funding these projects,” Gadkari told reporters after the meeting. “I have assured the banks that all their concerns will be resolved,” he added. It can be noted that compared to the BoT (Build- Operate-and-Transfer) model, HAM projects are better de-risked and thus offer higher return.

Gadkari said the problems can be divided into two - projects awarded during the previous Government and those awarded by the present Government - and claimed that “there is no problem in those projects which were awarded after we came to power”. But he was quick to add that he has also resolved many projects awarded before May 2014. Claiming that in the last three months the road sector has contributed nearly 12 per cent to the overall growth, Gadkari said, “He wants the contribution of the road sector to overall economic growth to grow further.”

Explaining why banks should fund these road projects, he said banks are also stakeholders in these projects and given the poor credit pick-up, it makes sense for them to lend to these HAM projects as they offer higher returns.“We can give banks secured business of around Rs 5-7 trillion. If we wanted, the NHAI could have raised money from the markets, but we want banks to get business,” he said. “Government, NHAI and banks are all together and we want all the stakeholders to study the issues and move forward,” he said, adding he is confident there’ll be progress in the road sector after “good discussion we had on Friday”.